Two example acquisitions built to the SBA rules in effect from October 1, 2026, with the math a lender runs: what the business earns, what the loan costs and how much cash the buyer brings.
An SBA loan covers 90% of the total cost, including working capital and closing costs. The seller takes about 95% of the price in cash at closing and holds a $75K note that waits until the bank is repaid. That note counts toward the down payment, so the buyer brings 5% in cash.
The business. A commercial HVAC service and replacement contractor. 26 years in business, 18 employees, 11 service vans. About 40% of revenue comes from recurring maintenance agreements. Last full year: $3.1M of revenue and $406,300 of profit after paying the owner a market salary.
| Uses | Amount |
|---|---|
| Purchase price | $1,380,000 |
| Working capital | $65,000 |
| Closing costs (legal, valuation, lender and third-party fees) | $38,400 |
| SBA guaranty fee | $35,958 |
| Total project cost | $1,519,358 |
| Sources | Amount | Share |
|---|---|---|
| SBA 7(a) loan, 10 years, 9.75% variable | $1,367,400 | 90.0% |
| Seller note on full standby | $75,000 | 4.9% |
| Buyer cash | $76,958 | 5.1% |
| Total | $1,519,358 | 100% |
How the lender sizes it. The lender works from last year's actual profit. $406,300 against $214,584 a year of loan payments ($17,882 a month) is 1.89x coverage. The SBA minimum for a first acquisition is 1.25x. After $40,000 a year for vans and tools, coverage is 1.71x. The loan also stays under the $1,380,000 appraised value, which the SBA requires.
What the seller agrees to. $1,305,000 in cash at closing, about 95% of the price. The last $75,000 is a note on full standby: no principal or interest payments until the SBA loan is repaid. That is what lets it count toward the buyer's 10%, and it can cover at most half of it.
What the buyer brings. $76,958 of documented cash. A personal guarantee. Home equity as added collateral if they own a home with 25% or more equity, since the business assets cover only part of the loan. U.S. citizenship or nationality, living in the U.S. Management experience a lender can connect to running a service business.
What moves the math. Profit down 20%: coverage 1.51x. Rate at the SBA maximum of 10.00%: 1.87x. An appraisal below the price: the buyer covers the gap in cash.
The buyer brings 10% of the total cost in cash. The seller carries $325K as a note paid monthly over 7 years, and an SBA loan covers the rest. At a price of $3M or more the lender orders an independent quality of earnings review, and the profit it confirms covers all loan payments 1.8 times.
The business. A contract machine shop making precision parts for industrial equipment makers. Founded in 1987, 31 employees, 24 CNC machines in a leased 38,000 sq ft building. The largest customer is 18% of sales. Last full year: $6.4M of revenue and $911,800 of profit after paying a general manager.
| Uses | Amount |
|---|---|
| Purchase price | $3,240,000 |
| Working capital | $145,000 |
| Closing costs (legal, valuation, quality of earnings review, lender and third-party fees) | $86,700 |
| SBA guaranty fee | $78,216 |
| Total project cost | $3,549,916 |
| Sources | Amount | Share |
|---|---|---|
| SBA 7(a) loan, 10 years, 9.75% variable | $2,869,900 | 80.8% |
| Seller note, 7%, paid monthly over 7 years | $325,000 | 9.2% |
| Buyer cash | $355,016 | 10.0% |
| Total | $3,549,916 | 100% |
How the lender sizes it. At a price of $3M or more, the lender orders an independent quality of earnings review, including a proof of cash that ties bank deposits to the tax returns, and sizes the loan on the profit it confirms: $911,800. Payments on both notes total $509,220 a year ($37,530 a month to the bank, $4,905 to the seller), so coverage is 1.79x against the SBA minimum of 1.25x. After $135,000 a year to replace machines, coverage is 1.53x. The bank loan plus the seller note, $3,194,900, stays under the $3,240,000 appraised value.
What the seller agrees to. $2,915,000 in cash at closing, 90% of the price. A $325,000 note at 7%, paid monthly over 7 years, that ranks behind the bank loan. The seller stays through the handover to introduce customers and train the team.
What the buyer brings. $355,016 of documented cash, the full 10%. Only a seller note on full standby counts toward the 10%, and this one is paid monthly. A personal guarantee. U.S. citizenship or nationality, living in the U.S. Manufacturing or plant leadership a lender can connect to running the shop.
What moves the math. Earnings review lands 20% lower, at $729,440: coverage 1.43x. Rate at the SBA maximum of 10.00%: 1.77x. An appraisal below the price: the buyer covers the gap in cash.
Hypothetical examples for education, built to SBA 7(a) rules in effect from October 1, 2026 (SOP 50 10 8.1): 9.75% variable rate (WSJ Prime 7.00% plus 2.75%), 10-year term, fiscal 2027 SBA guaranty fees. They describe no client, business or result, and no outcome is promised. Actual terms depend on the business, the lender and the buyer. Not lending, legal or tax advice.
